Harare's Licensing Reforms Aim for Regularization ...

Harare's Licensing Reforms Aim for Regularization but Excessive Fees Still Hinder SMEs

Audrey Galawu

Assistant Editor

Harare has announced a 54% reduction in shop license fees, lowering the annual cost from US$649 to US$300. The move, complemented by flexible payment plans, aims to ease financial burdens on Small and Medium Enterprises and promote formalization in Zimbabwe’s expanding informal economy.

Farai Mutambanengwe, executive officer of the SME Association of Zimbabwe, has welcomed the reduction and introduction of payment options such as monthly and quarterly installments but maintains that the fees remain unaffordable for many small-scale entrepreneurs.

“We appreciate the effort, but US$300 is still too much for micro and small businesses,” he said. “This was the same amount we objected to during dollarisation. For vendors and those running very small businesses, this figure is out of sync with reality.”

Mutambanengwe argued that licensing fees should encourage compliance rather than serve as a revenue collection tool. He proposed reducing fees to US$150 for small businesses and US$75 for micro enterprises to make regularization accessible and inclusive.

The new licensing structure introduces categories based on business size, with small businesses paying US$400, medium enterprises US$600, and large companies US$800 annually. Flexible payment options allow businesses to pay as little as US$40 monthly.

These changes address long-standing concerns about rigid, non-transferable licenses and aim to incentivize formalization, especially for frequently relocating businesses.

Harare’s informal economy has grown significantly due to factors such as company closures, currency instability, and inflation. Recognizing that SMEs contribute 60% to Zimbabwe’s GDP, the city council sees these reforms as part of its broader strategy to foster economic growth and transform Harare into a world-class city.

Despite these efforts, Mutambanengwe insists that more needs to be done to create an inclusive environment for SMEs, which form the backbone of the country’s economy. “Licensing should be an incentive, not a barrier,” he emphasized.

Speaking to Zim Now, Tafadzwa Mapfasa, who owns a clothing store in the CBD, expressed satisfaction with the reduction in license fees. She noted that the previous $600 fee was excessive for small businesses like hers.

"Imagine having to pay employees' salaries, rent, and then a license fee on top of that, not to mention other expenses we have to manage. $600 was just too much, especially considering the economic environment we are operating in. Most importantly, I’m happy with the payment plan. It will encourage us to stay consistent with our payments and motivate others who were avoiding compliance to start paying."

The policy changes, pending budget approval from the Ministry of Local Government and Public Works, underscore Harare’s commitment to supporting entrepreneurs and addressing systemic barriers to small business development.